Phosphorylation of proteins on tyrosyl residues is a key mechanism for the control of cell growth, differentiation and development. Phosphate is selectively removed from tyrosyl residues by a family of enzymes known as protein tyrosine phosphatases (PTPases), which play important roles in preventing malignant transformation, limiting signal transduction and in the maintenance of normal cell physiology. This proposal focuses on one particular PTPase, the 68-kDa PTP-MEG2, which contains a novel type of phospholipid-binding domain, a CRASH domain. We have found that this domain binds phosphatidylinositol-3,4,5-trisphosphate (Ptdlns(3,4,5)P3) with high affinity and that PTP-MEG2 is located on secretory vesicles in mast cells, T cells, and other cell types. We hypothesize that the physiological function of PTP-MEG2 is to regulate the formation or homeostasis of dense-core secretory vesicles of the regulated secretory pathway in hematopoietic and other cells. We will focus on this topic by addressing the following 3 specific aims: 1) Regulation of PTP-MEG2 by inositol phospholipids. 2) Identification of substrates for PTP-MEG2. 3) Physiological function of PTP-MEG2. Our overall goal is to understand the physiological function of PTPases in tyrosine phosphorylation-mediated cellular processes. PTP-MEG2 is a unique member of this class of enzymes and appears to integrate phosphoinositide signaling into tyrosine dephosphorylation and the regulation of intracellular vesicle traffic. This represents a novel and unexpected crosstalk between these three important aspects of cell biology. Thus, the significance of our work is high and it may bring many new insights that could be exploited for the treatment of human disease.